Amazon became the largest company in America last week, overtaking Walmart on the Fortune 500 after 13 years at No. 2. Its annual revenue now exceeds $600bn. In 1997, Jeff Bezos wrote his first shareholder letter. Amazon had $147.8m in revenue, 614 employees, and sold books.
THE LETTER
Amazon.com | Jeff Bezos | 1997
THE 60-SECOND VERSION
Bezos declared 1997 "Day 1 for the Internet" and staked Amazon's future on moving faster than established players entering online commerce. Twenty-eight years later, it is still Day 1. Officially.
Revenue grew 838% to $147.8m, from $15.7m the previous year. The company had 1.5 million customers and was burning cash.
Bezos told shareholders he would choose cash flows over flattering GAAP accounting, growth over short-term profitability, and bold bets over timid ones. He then asked them to decide whether this philosophy matched their own.
WHAT WE THINK
This letter is a founder putting his terms in writing before anyone had leverage to argue. Bezos was not describing Amazon's strategy so much as selecting his shareholders: agree with these principles, or sell. The nine bullet points in the middle of the letter read like a prenuptial agreement for capital. He warned them he would sacrifice short-term profitability for market position, warned them he would make bets that would fail, and warned them he would ignore Wall Street's reaction. Then he asked if they were still in.
What makes it remarkable is the discipline of writing this down 28 years before it would be tested at scale. Every decision Amazon made subsequently, from AWS to same-day delivery to $200bn in planned capital expenditure for 2026, traces back to this letter's core assertion: market leadership compounds into an unassailable economic model. Bezos was right. The question for any founder reading this today is simpler than it looks: do you have the conviction to write your own version of this letter, and the stomach to follow it for three decades?
THE ANALYSIS
The letter opens with what looks like celebration but is actually a warning:
"But this is Day 1 for the Internet and, if we execute well, for Amazon.com."
Bezos buried the conditional. "If we execute well" does a lot of work in that sentence. He spent the rest of the letter defining what execution meant: relentless customer focus, aggressive investment funded by the IPO and a $75m loan, and a hiring bar so high he told candidates they could not choose two out of three from "long, hard, or smart."
The financial picture was stark. Amazon had $125m in cash, 285,000 square feet of warehouse space, and an employee base that had quadrupled from 158 to 614 in twelve months. It was growing at 838% annually while losing money. Bezos wanted shareholders who understood that this was the plan, not a problem.
What he did not say is equally telling. There is no mention of profitability targets, no timeline for breaking even, no concession to Wall Street. He acknowledged the strategy was "not without risk" and left it there. The bet was simple: scale first, profit later, and the strongest market position wins.
The most revealing detail is buried in the infrastructure section. Amazon's distribution capacity grew from 50,000 to 285,000 square feet in a single year, and its employee base quadrupled from 158 to 614. Bezos was not testing a hypothesis. He was already scaling as if the hypothesis were proven. That confidence, bordering on recklessness to outside observers, is what separated Amazon from dozens of other internet retailers that had the same idea but lacked the nerve to fund it.
WHY IT MATTERS NOW
Amazon dethroning Walmart is not just a revenue milestone. It validates the thesis Bezos outlined 28 years ago when his company had fewer employees than a single Walmart store. He wrote that "market leadership can translate directly to higher revenue, higher profitability, greater capital velocity, and correspondingly stronger returns on invested capital." That sentence now describes the largest company in America.
The parallel worth watching: Amazon plans to spend $200bn in 2026 on AI, chips, robotics, and satellites. The same letter that justified spending borrowed money on a second warehouse in Delaware in 1997 is now justifying expenditure larger than the GDP of most countries. The Day 1 logic has not changed. The zeros have.
For founders and CEOs, the lesson is not "be like Bezos." It is that a clearly articulated long-term philosophy, written down early and adhered to stubbornly, becomes a compounding advantage in itself. Shareholders, employees, and customers all eventually select themselves around it. Bezos did not just build a company. He built the filter that decided who would help him build it.
ONE GOOD QUOTE
“We will make bold rather than timid investment decisions where we see a sufficient probability of gaining market leadership advantages."
Written when bold meant opening a second warehouse. Now it means $200bn on AI.
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This publication provides editorial commentary on publicly available shareholder letters. It is not investment advice. Financial figures are derived from public filings and company disclosures. Verify all figures independently before making any financial decisions.
